The matter came up for hearing on May 20,2002.

R .S.Mann, CHAIRMAN
S.K.Sharma, MEMBER
L.S.Deol, MEMBER

The Commission heard the representatives of the Board on the petition.

2. It was noted by the Commission that main Annual Revenue Report and the Tariff Application filed by Board were already pending with the Commission for orders. The Public Notice inviting objections from public on the Annual Revenue Report and Tariff Application has already been published in various newspapers on May 6, 2002. The Commission will be able to pass order on the ARR and Tariff Application filed by the Board after receipt of objections from public and public hearing on these objections. The Commission desired to know the need for filing of petition for Fuel Surcharge Adjustment pending finalization of ARR and Tariff Application.

3. The Board’s representatives pleaded that this petition is independent of the ARR and Tariff Application as the increase in freight of coal for the year 2002-2003 announced by Railways was not in the notice of the Board at the time of filing of ARR and Tariff Application. Accordingly the increased cost of freight has not been taken into account by the Board in its filing of ARR and Tariff Application before the Commission. The representatives of the Board also pleaded that as the increased cost is already being borne by the Board and the financial position of the Board is critical, the Fuel Surcharge as due may be allowed by the Commission at the earliest and the same may not be linked with the main ARR and Tariff Application of the Board which may take some time before final orders are passed by the Commission. The Board’s representatives further pleaded that the Fuel Surcharge has always been treated on different footing than the main tariff increase as this cost is a pass through to the consumers.

4. As regard the extent of the Fuel Surcharge, the representatives of the Board stated that detailed basis for the same has already been given in the petition filed with the Commission.

5. The Commission noted that there were certain discrepancies in the data given By the Board. The Commission also desired clarifications on certain matters from the Board specially the past practice being followed by the Board in such matters. The representatives of the Board were directed to file rejoinder on an Affidavit containing the clarifications, information etc. desired by the Commission.

6. The requisite clarification/information has been supplied by the Board on May 21,2002 vide Affidavit of even date signed by Chief Engineer/Commercial.

7. After going through the contents of the petition as well as rejoinder and other Revlevant facts, the Commission makes the following observations:-

1. As stated by the Board, the fuel cost is a pass through cost to the Consumers. Also the same is not treated at the same footing as the main tariff. Further, final orders on the main Tariff Application filed by the Board with the Commission may take some time as due procedure will have to be complied with. Moreover, the Board is already bearing the burden of the enhanced cost of fuel on account of the increased freight of coal. The Commission also noted that the delay in decision in Fuel Surcharge will involve unretractable loss to the Board. Further, even as per the Regulation 7. is clearly of a different footing than the normal tariff which is covered under Regulation 4 to 6. While Regulations 5 provides clearly for public hearing for normal tariff increase, there is no such provision in case of Fuel Surcharge adjustment. It is thus not obligatory for the Commission to hold public hearing before allowing Fuel Surcharge Adjustment. It is true that the Commission does not have Fuel Surcharge formula as yet in place as the same is not included in the Regulations and first tariff order of the Commission, however, decided that the present Fuel Surcharge Adjustment may now be allowed without finalization of Fuel Surcharge Formula. The Commission would, however, like the Board to examine the issue and come up with a suitable Fuel Surcharge adjustment formula so that the same can be considered by the Commission. Aim should be to have the Fuel Surcharge adjustment formula duly approved by the Commission in place before the next Fuel Surcharge adjustment is required by the Board.
   
   

2. Though the Board has claimed 2% increase in freight, enclosure from Ropar Thermal Plant indicating colliery-wise freight supports only less than 1% increase in 8 out of 10 collieries and less than 2% increase in the remaining 2 collieries. Thus even the weighted average is much less than 1%. The Board’s representative in his oral submission stated that at the time of submission of reply, the data for supplies from WCL and SECL (Korya Rewa) was not available with the Board and as most of the coal in Ropar is received from these subsidiaries and the increase in rates of freight from these subsidiaries is much more, the average increase in coal cost works out to 1.9%. The Board also stated that the data regarding coal linkages will not be available for the whole year but only for three months. Further, the Board has no control over actual receipt of coal which may be substantiallyu in deviation of the linkages. In view of all above, the Commission allowed, for the limited purpose of Fuel Surchage adjustment, increase in cost of freight at the Plants as claimed by the Board. The Commission, however, desired that in future the Board will calculate additional cost with reference to the proportion of coal actually received from each colliery the year before or with reference to linkage for the relevant year worked out on prorata basis with reference to linkage already available with th Board.
   
   

3. The Board has claimed increase in cost of power purchased from out Side the State (NTPC) under Fuel Surcharge Adjustment. The Commission noted that any escalation in power purchased by the Board from out side the State should normally get covered under increase in cost of power purchased and not under Fuel Surcharge and as such should be reflected under ARR and Tariff Application and not under present petition. This escalation will be covered under Fuel Surcharge Adjustment only for NTPC for which the decision will be taken by the CERC. The Commission, therefore, dis-allows this cost from the calculations made by the Board. However, the Board, if it so desires, may consider covering this cost in its formula for Fuel Surcharge Adjustment to be filed before the Commission. The Commission, thereafter, take a final view on the matter after public hearing and taking into account all aspects.
   
   

4. The additional fuel cost worked out by the Board has been spread over number of units supplied to various classes of consumers excluding AP consumers. Excluding agricultural units in this manner amounts to burdening other consumers on account of free supply of nergy to agricultural sector. Moreover, the Commission noted that in the past the Board has been including the energy supplied to the AP consumers while spreading the fuel cost. In view of above and especially in view of the fact that the Commission is yet to pass final order regarding Fuel Surcharge Adjustment formula, the Commission decided to spread the total cost over the energy supplied to all consumers including agriculture.
   
   

5. Regarding rounding off of the fuel surcharge, the Commission noted that the Board in its affidavit has stated that in past the same has been rounded to the next whole number of one decimal point on plus side. The Board was, however, unable to show any single instance of increase in part paisa in the last five years. The Commission also noted that the more appropriate and acceptable method of rounding is to consider half and greater than half as whole and ignore less than half, The Commission, therefore, decides that the exact additional cost worked out should be rounded off to nearest whole paisa only by the standard method of rounding

      In view of the above, the Commission approves the levy of fuel surcharge @ 1 paise per unit w.e.f. July 1,2002.

Place : Chandigarh
Dated : June 3, 2002